Question
Project Accounting Break-Even Point (in units) Price per Unit Variable Cost per Unit Fixed Costs Depreciation A 6,240 $53 $99,000 $24,000 B 780 $1,040 $503,000
Project Accounting Break-Even Point (in units) Price per Unit Variable Cost per Unit Fixed Costs Depreciation A 6,240 $53 $99,000 $24,000 B 780 $1,040 $503,000 $101,000 C 1,980 $20 $13 $4,500 D 1,980 $20 $ 8 $16,000
a.Calculate the missing information for each of the above projects.
b.Note that Projects C and D share the same accounting break-even. If sales are above the break-even point, which project would you prefer? Explain why.
c.Calculate the cash break-even for each of the above projects. What do the differences in accounting and cash break-even tell you about the four projects?
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